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front page lede: so perky!
Short sales can mean bonuses for some homeowners
Carolyn Said
Thursday, February 9, 2012
At first, the San Leandro woman, who had fallen behind on her condo payments, thought the letter was a scam. "You could sell your home, owe nothing more on your mortgage and get $20,000," it proclaimed in large type.
"I almost ripped it up," she said.
But the letter was sent by JPMorgan Chase, the bank behind her mortgage. And after she sold her condo two weeks ago for $98,000 - a third of what she owed on it - Chase indeed gave her $20,000 as an incentive payment, according to the woman and her real estate agent, Jasmin Rhodes of Prudential California Realty.
"I'm not sure why I was so blessed to be given that opportunity," said the woman, who asked that her name be withheld for personal reasons.
In a new development, banks are now selectively offering substantial sums of money - up to $35,000 - to some homeowners to encourage short sales, in which homes are sold for less than is owed on the mortgage.
Real estate experts said that banks can net bigger proceeds in short sales by sidestepping the costs, lengthy timeline and uncertain sales prospects of foreclosures. With delinquencies continuing to mount, quick disposition of some homes makes sense for the banks and for the overall housing market.
Nationally, 1.4 million homes were in the foreclosure pipeline in December 2011, and 3.2 million homes have been repossessed by banks since September 2008, according to mortgage information firm CoreLogic.
The process by which banks pick homeowners to offer incentives and determine the amounts is unknown and sometimes seems arbitrary, real estate experts said, other than that the recipients are people who are behind on their payments and whose homes are underwater.
"It is like hitting the lottery," said Carylon Dopp, an agent with Security Pacific Real Estate. She has seen banks send solicitation letters offering up to $35,000 to homeowners to do a short sale, and also seen the money being offered only after the sale is in escrow.
"They are being very mysterious and quiet about it," said Peter Harris of Bradley Real Estate in Marin County, who has seen Chase offer up to $30,000 as an incentive for a short sale. "They're not telling the agents or promoting it."
Homeowners can use the bonus payouts however they like - for moving expenses, as a security deposit on a new place, as a nest egg or simply to pay off other debts.
Misplaced paperwork
Some speculate that the offers occur when banks misplace essential paperwork and can't defend a legal challenge to a foreclosure. That issue came to a head more than a year ago in the robo-signing scandal, in which foreclosure documents were signed without proper review. The controversy led to a probe by state attorneys general and a multibillion-dollar settlement in that case is expected soon.
"My belief is that banks cannot produce a deed of trust or a note" when they offer the incentives, Rhodes said.
Throughout the foreclosure crisis, banks have dragged out short sales over many months and failed to approve reasonable offers, agents say. The turnaround has come only recently and isn't universal.
"Banks are taking a renewed eye in the past six months toward short sales, where they had had more of a jaundiced eye previously," said Stan Humphries, chief economist at real estate website Zillow.com.
"I can see why (incentive payments) are an arrow they want in their quiver," he said. "It's much more efficient than going through a foreclosure." But they need to balance that, he said, with not encouraging more people "to go down the path in the first place."
Cindi Hagley, managing broker who oversees Northern California short sales for Prudential California Realty, said she sees the substantial payouts only about 5 to 10 percent of the time.
Short sales can mean bonuses for some homeowners
Carolyn Said
Thursday, February 9, 2012
At first, the San Leandro woman, who had fallen behind on her condo payments, thought the letter was a scam. "You could sell your home, owe nothing more on your mortgage and get $20,000," it proclaimed in large type.
"I almost ripped it up," she said.
But the letter was sent by JPMorgan Chase, the bank behind her mortgage. And after she sold her condo two weeks ago for $98,000 - a third of what she owed on it - Chase indeed gave her $20,000 as an incentive payment, according to the woman and her real estate agent, Jasmin Rhodes of Prudential California Realty.
"I'm not sure why I was so blessed to be given that opportunity," said the woman, who asked that her name be withheld for personal reasons.
In a new development, banks are now selectively offering substantial sums of money - up to $35,000 - to some homeowners to encourage short sales, in which homes are sold for less than is owed on the mortgage.
Real estate experts said that banks can net bigger proceeds in short sales by sidestepping the costs, lengthy timeline and uncertain sales prospects of foreclosures. With delinquencies continuing to mount, quick disposition of some homes makes sense for the banks and for the overall housing market.
Nationally, 1.4 million homes were in the foreclosure pipeline in December 2011, and 3.2 million homes have been repossessed by banks since September 2008, according to mortgage information firm CoreLogic.
The process by which banks pick homeowners to offer incentives and determine the amounts is unknown and sometimes seems arbitrary, real estate experts said, other than that the recipients are people who are behind on their payments and whose homes are underwater.
"It is like hitting the lottery," said Carylon Dopp, an agent with Security Pacific Real Estate. She has seen banks send solicitation letters offering up to $35,000 to homeowners to do a short sale, and also seen the money being offered only after the sale is in escrow.
"They are being very mysterious and quiet about it," said Peter Harris of Bradley Real Estate in Marin County, who has seen Chase offer up to $30,000 as an incentive for a short sale. "They're not telling the agents or promoting it."
Homeowners can use the bonus payouts however they like - for moving expenses, as a security deposit on a new place, as a nest egg or simply to pay off other debts.
Misplaced paperwork
Some speculate that the offers occur when banks misplace essential paperwork and can't defend a legal challenge to a foreclosure. That issue came to a head more than a year ago in the robo-signing scandal, in which foreclosure documents were signed without proper review. The controversy led to a probe by state attorneys general and a multibillion-dollar settlement in that case is expected soon.
"My belief is that banks cannot produce a deed of trust or a note" when they offer the incentives, Rhodes said.
Throughout the foreclosure crisis, banks have dragged out short sales over many months and failed to approve reasonable offers, agents say. The turnaround has come only recently and isn't universal.
"Banks are taking a renewed eye in the past six months toward short sales, where they had had more of a jaundiced eye previously," said Stan Humphries, chief economist at real estate website Zillow.com.
"I can see why (incentive payments) are an arrow they want in their quiver," he said. "It's much more efficient than going through a foreclosure." But they need to balance that, he said, with not encouraging more people "to go down the path in the first place."
Cindi Hagley, managing broker who oversees Northern California short sales for Prudential California Realty, said she sees the substantial payouts only about 5 to 10 percent of the time.